Budgeting is an important aspect of financial planning of a business. With the help of capital budgeting techniques a business decides the allocation, funding and the management of capital for long term projects, short term projects and other operations within the business. There are
Capital budgeting, which is also entitled investment decision, is the preparation procedure second-handed to conclude whether an organization’s long term investments, major capital, or expenditures are worth pursuing.
A budget can be defined as a written estimate of the future financial performance of a business, project or a particular financial unit. With the help of budgeting one can effectively deploy financial resources, equipment and workforce to the business and can estimate the
Capital Budgeting Decisions With Uncertain Cash Flows: Learning Objectives: Evaluate an investment project that has uncertain cash flows. The analysis in this chapter (capital budgeting decisions) has assumed that all of the future cash flows are known with certainty. However, future cash flows are
Capital Budgeting Definition: The process of planning significant outlays on projects that have long-term implications such as the purchase of new equipment or the introduction of a new product.